The Konga’s Profitability Tweet

The Konga’s Profitability Tweet

Sim Shagaya is correct with this tweet but interestingly the Konga of today is totally different from the one he ran.  So, let us not extrapolate that the old Konga could have gotten to this evolving destination.  The Konga which I posited should be sold, then, is totally not what we have now. The current Konga runs on a hybrid model, taking advantage of many physical stores across Nigeria through the Zinox Group. 

Those stores help reduce marginal cost and improve unit economics. So, it is key we do not muddle it up with assumption that ecommerce is suddenly becoming profitable because Konga is. The fact is this: today’s Konga is not a pure play ecommerce company. It is a hybrid physical business with a super-online order placement portal. Yes, it is NOT asset-light, and certainly pays many real estate bills. 

Simply, if the money is in the physical space, why must we build a business that is exclusively online? Unless for pride and fancy, it makes no sense. The new Konga understands this and is working to enter the race where the opportunities abound. With these stores, the new Konga will crash its marginal cost and that would help it to take advantages of the online elements to deepen its competitive capabilities in the physical. As it does this, Konga would become the most respected retail chain in Nigeria.  There is no other company that would come close because what we are witnessing is the birth of a new category and Konga will be the undisputed category-king. For years, Nigeria has failed to create a retail chain: Konga is bringing one with the unbounded and unconstrained capabilities of the internet fused with atoms of stores across Nigeria.

Read this piece I wrote in May 2018; it is playing as most expected when they began to invest in those physical stores. In Tekedia Live today, our Faculty explained better (the video below).

The Brilliance of the New Konga Strategy

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2 thoughts on “The Konga’s Profitability Tweet

  1. Konga’s model is still bounded, reaching profitability doesn’t mean it’s innovative, it’s the same way you open shops across markets in Lagos, Abuja and Onitsha, and hit profit within two years. The only difference with Konga is that you can order online, but that doesn’t mean you can order from anywhere in Nigeria and get it delivered.

    This model is for the moneymen, not start-ups that wish to scale fast with profitability in few years, web remains a secondary matter in Konga’s case; the web is not the operating system behind its framework. High volumes of orders from ‘unfriendly’ locations can easily erode profitability, even when you are making more sales…

    In any case, reaching profitability is always something nice to hear, because no one ventures into anything with the aim of making losses.

    Good job from Team Konga.

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